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Archives for February 2025

San Diego Housing Market is Expected to Heat Up in 2025

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Thinking of buying or selling a home in San Diego? You might want to buckle up! San Diego is indeed expected to be a competitive real estate market in 2025, landing in the top 20 hottest markets according to a recent Zillow report. This means increased competition among buyers, which could potentially drive up prices. Let's dive into why this is happening and what it means for you.

San Diego is Predicted to be One of 2025's Hottest Real Estate Markets

Why San Diego? The Perfect Storm

As someone who's been following the San Diego real estate scene for a while, I can tell you this isn't entirely surprising, but it is a significant shift. What's driving this prediction? It all boils down to a few key factors that make San Diego so desirable.

  • Limited Housing Inventory: This is the big one. San Diego has been grappling with a housing shortage for years. We simply haven't built enough homes to keep up with demand. Zillow’s report highlights that the “hottest markets” are generally “starved for housing inventory.”
  • Desirable Location and Lifestyle: Let's be honest, who doesn't want to live in San Diego? With its amazing weather, beautiful beaches, thriving job market, and laid-back lifestyle, it's a magnet for people from all over the country.
  • Strong Job Market: San Diego boasts a diverse and robust economy, with strong sectors in technology, biotech, defense, and tourism. A growing job market naturally attracts more residents.
  • Delayed Home Building: For years, home building has been slow compared to the growth in jobs. This has exacerbated the housing shortage, putting even more pressure on the market.

Zillow's Methodology: How They Predict the Heat

Their “hottest market” ranking isn't just a guess; it's based on a sophisticated index that takes several factors into account:

  • Forecasted Home Value Appreciation: This looks at how much Zillow expects home values to increase over the coming year.
  • Rate of Increase Over the Previous Year: How quickly are home values rising compared to the year before? A faster rate of increase indicates a hotter market.
  • Days on Market: How long do homes typically stay on the market before being sold? Shorter times suggest high demand.
  • Projected Change in Owner-Occupied Housing: This indicates whether more people are buying homes to live in, rather than as investments.
  • Jobs vs. Building Permits: This is a crucial factor. The index looks at the difference between the number of jobs added over the last two years and the number of building permits issued for new homes during the same period. A significant gap indicates a potential housing shortage.

San Diego's Rise in the Ranks: A Closer Look

San Diego jumped ten spots, landing at number 19 on Zillow's list of hottest markets for 2025. That's a pretty significant jump! But what does it really mean for those of us living here, or hoping to move here?

Here's what I think this means for San Diego:

  • Increased Competition: Expect bidding wars, especially for desirable properties in popular neighborhoods.
  • Potentially Rising Prices: While the market has cooled somewhat recently, increased demand could put upward pressure on prices again.
  • Faster Sales: Homes may sell more quickly, so be prepared to act fast if you find a property you like.

The Ripple Effect: Riverside's Role

The report also mentions Riverside, predicting it to be the 22nd hottest market. Riverside often acts as a “release valve” for San Diego's affordability issues. People who are priced out of San Diego are increasingly willing to commute longer distances for more affordable homes in Riverside County.

What About Affordability?

While being a “hottest market” might sound like a good thing, it's not necessarily great news for everyone. It can exacerbate affordability issues.

Consider this:

  • Decades of sluggish homebuilding have created a severe housing shortage in San Diego.
  • This shortage makes it difficult for many people to find affordable housing.
  • A competitive market can push prices even higher, making it even harder for first-time buyers and those on a budget.

I believe, and I have seen, that we need more innovative solutions, such as increasing density in transit-oriented areas and streamlining the permitting process for new construction, to address the affordability crisis effectively.

San Francisco's Slide: A Tale of Two Cities

It's interesting to compare San Diego's trajectory with that of San Francisco, which fell 19 positions in Zillow's rankings. According to Zillow's chief economist, home values in San Francisco are expected to continue to decline. This is due to several factors:

  • High Cost of Living: San Francisco's exorbitant cost of living is driving some residents to seek more affordable alternatives.
  • Tech Industry Shifts: Changes in the tech industry, including remote work options and companies relocating, are impacting San Francisco's housing market.

What This Means for Buyers and Sellers in San Diego

Okay, so you know the prediction and the factors behind it. But what should you actually do with this information? Here's my take on how this might impact buyers and sellers in San Diego:

For Buyers:

  • Be Prepared: Get pre-approved for a mortgage, have your finances in order, and be ready to make a competitive offer.
  • Work With an Experienced Agent: A local real estate agent can provide valuable insights into the market and help you navigate the buying process.
  • Consider Different Neighborhoods: Be open to exploring different neighborhoods and communities, especially those that might be slightly further from the beach or downtown.
  • Don't Overpay: While it's important to be competitive, don't get caught up in a bidding war and overpay for a property. Set a budget and stick to it.

For Sellers:

  • Consider Timing: If you're thinking of selling, now might be a good time to take advantage of increased demand.
  • Price Strategically: Work with your agent to price your home competitively, based on market conditions and comparable sales.
  • Make Necessary Repairs and Improvements: To attract buyers, make sure your home is in good condition and consider making some minor updates or improvements.
  • Stage Your Home: Staging your home can help potential buyers visualize themselves living there and increase its appeal.

My Final Thoughts: San Diego's Enduring Appeal

While the prediction is certainly noteworthy, it's important to remember that real estate is a complex and dynamic market. Many factors can influence home prices and demand, including interest rates, economic conditions, and local policies.

In my experience, making investment decisions based on one report may not be ideal. Here are some points that will give you a more nuanced view:

  • Interest Rates: Interest rates play a significant role in housing affordability. If rates rise, it could dampen demand and cool the market.
  • Economic Conditions: A strong economy can boost demand for housing, while an economic downturn can have the opposite effect.
  • Local Policies: Local policies regarding zoning, land use, and housing development can also impact the supply of housing and affordability.

Even with the potential for increased competition and rising prices, I remain optimistic about San Diego's real estate market in the long term. Its desirable location, strong economy, and high quality of life will continue to attract people from all over the world.

However, it's crucial that we address the housing shortage and work towards creating more affordable housing options for everyone. This will require a collaborative effort from policymakers, developers, and community members.

Zillow's prediction underscores the importance of affordability and inventory in the housing market. Regions with limited housing supply and relatively affordable prices are likely to see increased demand and competition. San Diego fits this description, which is why it's expected to be one of the hottest real estate markets in 2025.

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Today’s Mortgage Rates February 28, 2025: Rates Drop Significantly

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Great news for anyone looking to buy a home or refinance! As of February 28, 2025, mortgage rates are at their lowest levels this year. According to Zillow, the national average for a 30-year fixed mortgage is 6.31%, and the 15-year fixed rate is 5.61%. With these interest rates trending downwards, it's a really good time to think about buying a home or refinancing your current mortgage. I know it can be a bit overwhelming, but let's break down what this all means for you.

Today's Mortgage Rates – February 28, 2025: Significantly Drop

Key Takeaways:

  • Mortgage rates are at their lowest this year.
  • The 30-year fixed rate is currently 6.31%.
  • The 15-year fixed rate has dropped to 5.61%.
  • Economists don't expect a big drop in rates for the rest of 2025.
  • Now might be a good time to lock in lower rates.

Understanding Current Mortgage Rates

Okay, so what do these numbers actually mean? The mortgage market can seem like a totally different language, especially when rates are going up and down like a rollercoaster. That's why it's super important to understand the basics of these rates and what kind of loans are out there.

As of this week, here’s a snapshot of the latest mortgage rates, according to Zillow:

Mortgage Type Current Rate
30-year Fixed 6.31%
20-year Fixed 5.96%
15-year Fixed 5.61%
5/1 ARM 6.55%
7/1 ARM 6.25%
30-year VA 5.74%
15-year VA 5.21%
5/1 VA 5.92%

Now, remember that these are just averages. Your actual rate will depend on a bunch of things, like your credit score, your income, how much you're putting down, and even where you live. It's always a good idea to shop around and get quotes from a few different lenders to see who can give you the best deal.

Current Refinance Rates

Thinking about refinancing? It could be a smart move, especially with rates dropping! Refinancing basically means taking out a new mortgage to replace your old one, usually to get a lower interest rate or change the terms of your loan.

Here's what the refinance rates are looking like right now, also from Zillow:

Refinance Type Current Rate
30-year Fixed 6.34%
20-year Fixed 6.04%
15-year Fixed 5.62%
5/1 ARM 6.70%
7/1 ARM 6.77%
30-year VA 5.75%
15-year VA 5.46%
5/1 VA 6.06%
30-year FHA 6.06%

Just like with buying a home, your refinance rate will depend on your individual situation. And keep in mind that there are usually costs associated with refinancing, like appraisal fees and closing costs, so you'll want to make sure it makes financial sense for you before you jump in.

Monthly Payments Under Current Rates

Okay, so you know the rates, but what does that really mean for your monthly budget? Let's look at some examples. These are approximate, but they'll give you a good idea of what to expect. Remember to add in property taxes and insurance for a complete picture!

Monthly Payment on $150,000 Mortgage

  • 30-year Fixed: Around $976.58
  • 15-year Fixed: Around $1,201.26

Monthly Payment on $200,000 Mortgage

  • 30-year Fixed: Around $1,301.18
  • 15-year Fixed: Around $1,601.68

Monthly Payment on $300,000 Mortgage

  • 30-year Fixed: Around $1,951.77
  • 15-year Fixed: Around $2,402.52

Monthly Payment on $400,000 Mortgage

  • 30-year Fixed: Around $2,602.36
  • 15-year Fixed: Around $3,203.36

Monthly Payment on $500,000 Mortgage

  • 30-year Fixed: Around $3,252.95
  • 15-year Fixed: Around $4,004.20

See how much faster you pay off the loan with a 15-year mortgage, but your monthly payments are higher? It's a trade-off!

How Mortgage Interest Rates Work

So, what is a mortgage interest rate, anyway? Simply put, it's the cost of borrowing money to buy a home. It's expressed as a percentage of the loan amount, and it's how the lender makes money on the loan.

There are two main types of mortgage interest rates:

  • Fixed-Rate Mortgages: These are pretty straightforward. Your interest rate stays the same for the entire life of the loan, so your monthly payments are predictable and easy to budget for. I generally recommend these to first-time homebuyers, as the predictability is key.
  • Adjustable-Rate Mortgages (ARMs): These loans start with a lower interest rate for a certain period, but then the rate can change based on what's happening in the market. For example, a 7/1 ARM has a fixed rate for the first seven years, and then the rate adjusts every year after that. ARMs can be riskier because your payments could go up if interest rates rise.

What Influences Mortgage Rates?

Mortgage rates don't just magically appear. They're affected by a whole bunch of different factors, including:

  • Economic Indicators: Things like inflation, employment rates, and how much people are spending all play a role. Mortgage rates often follow the trends of the 10-year Treasury yield.
  • Federal Reserve Policies: The Federal Reserve (the Fed) can influence short-term interest rates, which can indirectly affect mortgage rates. When the Fed raises rates, mortgage rates tend to go up, and vice versa.
  • Housing Market Dynamics: If there are a lot of homes for sale and not many buyers, rates might go down to attract more people. If there are tons of buyers competing for a limited number of homes, rates might go up.
  • Credit Score and Financial Health: Lenders look at your credit score, how much debt you have, and your income to decide what interest rate to offer you. The better your credit score and financial situation, the lower your rate is likely to be.

Future Projections

While these lower rates are encouraging, it's important to keep expectations in check. While Zillow shows that today's mortgage rates are at their lowest, experts don’t foresee a drastic drop for the remainder of 2025.

According to economists, significant decreases are not expected, and Freddie Mac anticipates that the average 30-year fixed mortgage rate will stabilize around 6.50% by the end of 2025.

Comparing Different Loan Types

Choosing the right type of mortgage can feel like navigating a maze! Let's break down the pros and cons of some popular options:

  • Fixed-Rate Mortgages: These offer stability. Your interest rate and monthly payment stay the same for the entire loan term. This is great for budgeting and peace of mind. However, if interest rates drop significantly, you won't benefit unless you refinance.
  • ARMs (Adjustable-Rate Mortgages): These often start with lower interest rates than fixed-rate mortgages, which can be tempting. But be careful! After the initial fixed-rate period, your interest rate can adjust based on market conditions. If rates go up, your monthly payment will go up too. ARMs can be risky, especially if you're planning to stay in the home for a long time. I generally advise people to proceed with caution.
  • VA Loans: These are special loans for veterans and active-duty military personnel. They often have lower interest rates and don't require a down payment. They're a fantastic benefit for those who qualify!

The Psychological Aspect of Buying a Home

Buying a home is a huge decision, and it's not just about the numbers! There's a lot of emotion involved. Understanding mortgage rates can help you feel more confident and in control.

It's normal to feel stressed during the home-buying process. Take your time, do your research, and don't be afraid to ask questions. Finding a trusted lender who can explain things clearly can make a big difference. Remember, owning a home is a big step, but it can also be incredibly rewarding.

Real-World Impact of Current Rates

Lower mortgage rates can have a big impact on the housing market:

  • More people can afford to buy homes: Lower rates mean lower monthly payments, making homeownership more accessible.
  • Home sales may increase: When rates are low, more people are likely to enter the market, driving up demand for homes.
  • Home prices might rise: Increased demand can lead to higher home prices, especially in popular areas.
  • Refinancing activity could pick up: Homeowners who already have a mortgage may be able to save money by refinancing at a lower rate.

Conclusion on Current Trends

So, what's the bottom line? Today's lower mortgage rates offer a real opportunity for both homebuyers and those looking to refinance. If you're thinking about buying a home, now might be a good time to start exploring your options. And if you already own a home, it's definitely worth checking to see if you could save money by refinancing. Just remember to do your homework, shop around, and find a lender you trust. Good luck!

Work with Norada in 2025, Your Trusted Source for

Real Estate Investing

With mortgage rates fluctuating, investing in turnkey real estate

can help you secure consistent returns.

Expand your portfolio confidently, even in a shifting interest rate environment.

Speak with our expert investment counselors (No Obligation):

(800) 611-3060

Get Started Now

Mortgage Rates Plunge for 6th Week, Hitting Two-Month Low

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In some welcome news for potential homebuyers, the average mortgage rate has fallen for the sixth week in a row, hitting its lowest point since December. This could be a turning point for many who have been patiently waiting for a more favorable market. Let's dive into what this means for you and the housing market right now.

Mortgage Rates Plunge for 6th Week, Hitting Two-Month Low

For the week ending February 27, 2025, Freddie Mac's Primary Mortgage Market Survey® reported that the average rate on a 30-year fixed-rate mortgage has dropped to 6.76%. This is down from 6.85% the previous week, and significantly lower than the 6.94% we saw this time last year. It might not sound like a massive drop, but in the world of mortgages, even small fractions can make a big difference in your monthly payments and overall affordability. This latest dip marks the sixth consecutive week of declines, offering a sustained period of relief after months of rate volatility.

To give you a clearer picture, here's a quick breakdown of the key numbers from Freddie Mac's latest report:

Mortgage Type Current Average Rate 1-Week Change 1-Year Change
30-Year Fixed-Rate Mortgage 6.76% -0.09% -0.18%
15-Year Fixed-Rate Mortgage 5.94% -0.10% -0.32%

Data Source: Freddie Mac, Primary Mortgage Market Survey® as of 02/27/2025

As you can see, it's not just the 30-year mortgage that's becoming more attractive. The 15-year fixed-rate mortgage – often favored by those looking to pay off their homes faster and save on interest in the long run – has also seen a decrease, falling to 5.94%. This is a notable drop from 6.04% the previous week and a considerable decrease from the 6.26% average rate a year ago.

Why is this Rate Drop Important?

Mortgage rates are a major driving force in home buying decisions. When rates are high, it becomes more expensive to borrow money, pushing up monthly payments and shrinking the pool of buyers who can afford to enter the market. Conversely, when rates fall, it's like a breath of fresh air for buyers. It increases their purchasing power, making homes more affordable and potentially opening doors that might have been closed just weeks or months ago.

This recent decline is particularly significant because it brings rates to their lowest level since December 2024. Think about it – the last time rates were this low, the holiday season was in full swing! While we did see a brief dip to a 2-year low last September, rates have largely been stubbornly hovering around the 7% mark for much of this year. Considering that just over four years ago, we were enjoying record low rates around 2.65%, according to reports, the current situation still feels elevated. However, any downward movement is a step in the right direction.

Is This Enough to Solve the Affordability Crisis?

Now, before you start packing your boxes and house hunting with renewed vigor, it's important to keep things in perspective. This rate decrease, while welcome, hasn’t been enough to change the affordability equation for many prospective home shoppers, especially first-time buyers.

The reality is that while mortgage rates are easing, they are still considerably higher than what we've been accustomed to in recent years. Combined with still-elevated home prices in many areas, affordability remains a significant hurdle, especially for those who are entering the market for the first time and don't have the advantage of equity from selling an existing home.

We’ve also seen some concerning data on home sales recently. Sales of previously occupied homes fell in January. This is likely a result of the earlier surge in mortgage rates and persistent high prices that have been freezing out potential buyers, even with more homes becoming available on the market.

Adding to this cautious outlook, new data on pending home sales – which are considered a leading indicator of future completed sales – slid to an all-time low in January. This suggests that we might see further declines in home sales in the coming months, even with these recent rate drops. It's a bit of a mixed bag – rates are going down, which is good, but the broader market signals are still showing some headwinds.

Why Are Mortgage Rates Dropping?

So, what's behind this recent streak of falling mortgage rates? Well, mortgage rates don't operate in a vacuum. They are heavily influenced by several factors, especially how the bond market reacts to the Federal Reserve's interest rate policies.

In particular, the 10-year Treasury yield as a key benchmark. Lenders use this yield as a guide when pricing home loans. We've seen a pullback in mortgage rates that mirrors a decline in the 10-year Treasury yield. This yield, which was around 4.79% in mid-January, has been generally trending downwards since then.

This downward trend in the 10-year Treasury yield often reflects broader economic anxieties among bond investors. In this case, worries about the potential economic impacts of tariffs and other policies, like those proposed by the Trump administration, are mentioned as contributing factors. As of Thursday's midday trading, the 10-year yield was at 4.28%. Essentially, when investors are uncertain about the economic outlook, they tend to move towards safer investments like Treasury bonds, which can push yields down, subsequently influencing mortgage rates.

What Does This Mean for the Spring Homebuying Season?

The timing of this rate decline is particularly interesting because it coincides with the start of the spring homebuying season. This is typically the busiest time of year for the housing market, as families with children often prefer to move during the summer break.

Sam Khater, Freddie Mac’s chief economist, sums it up nicely, stating that “The drop in mortgage rates, combined with modestly improving inventory, is an encouraging sign for consumers in the market to buy a home.” I agree with this sentiment. We are seeing some positive shifts in the market.

Let's break down why this is potentially good news for the spring:

  • Lower Rates = Increased Demand: Lower mortgage rates can entice more buyers to jump into the market. For those who were on the fence, the reduced borrowing costs might be the push they need to start actively house hunting.
  • Modestly Improving Inventory: According to data from Redfin, the inventory of homes on the market climbed last month to its highest level since June 2020. More homes on the market mean more choices for buyers and potentially less intense bidding wars, although local market conditions will vary greatly.
  • Potential for More Balanced Market: The combination of slightly lower rates and increased inventory could lead to a more balanced market, shifting away from the strong seller's market we've seen for the past few years. This doesn't mean it will suddenly become a buyer's market everywhere, but it could give buyers a bit more negotiating power and breathing room.

However, it's crucial to remember that even with these encouraging signs, mortgage rates and prices still remain an unaffordable combination for many. The market is still sensitive to any shifts in economic outlook and Federal Reserve policy. We could see rates fluctuate again if economic data surprises or if inflation proves to be more persistent than anticipated.

Takeaway:

The average mortgage rate falling for the 6th straight week and hitting its lowest level since December is undoubtedly positive news for the housing market. It offers a bit of relief to potential homebuyers and could inject some much-needed momentum into the spring homebuying season. However, it’s crucial to remember that affordability challenges remain, and the market is still navigating a complex economic landscape. While this rate dip is encouraging, it's just one step in what will likely be a longer journey toward a more balanced and accessible housing market.

Work with Norada in 2025, Your Trusted Source for

Real Estate Investing

With mortgage rates fluctuating, investing in turnkey real estate

can help you secure consistent returns.

Expand your portfolio confidently, even in a shifting interest rate environment.

Speak with our expert investment counselors (No Obligation):

(800) 611-3060

Get Started Now

Housing Market Trends: Typical Down Payment Jumps 15% to $63,000

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Dreaming of owning a home? It's a big goal, and one of the first questions that pops into your head is probably, “How much do I need to save for a down payment?” Well, according to recent data, across the U.S., the typical down payment for homebuyers is now 16% of the home’s price. Yes, you read that right – 16%.

That's up from 15% just a year ago, according to a Redfin analysis of county records from 40 of the most populated metro areas in the U.S. (December 2024 data). In real money terms, we're talking about a median down payment of roughly $63,000. That’s a significant chunk of change, and it's important to understand why this number is what it is, and what it means for you if you’re thinking about buying a home.

Housing Market: The Typical Buyer’s Down Payment Is 16% of the Home’s Price

So, why are homebuyers typically putting down 16% right now? The simplest answer, and frankly, the biggest reason, is that home prices have gone up. Think about it like this: if you're buying something more expensive, even if you put down the same percentage, the actual dollar amount you need is going to be higher. And that’s exactly what’s happening in the housing market.

According to the Redfin report, the median U.S. home sale price increased by 6.3% year-over-year in December 2024, reaching around $428,000. That’s a big jump! So, even if buyers were still aiming for that 15% down payment from last year, the higher prices automatically mean a larger down payment in dollars.

In fact, the typical down payment in dollar terms has gone up by 7.5% compared to the previous year, which is the biggest increase we’ve seen in five months. That $63,188 figure really puts things into perspective – it’s about $4,000 more than what homebuyers were putting down just a year prior.

Think about it from my perspective, having watched the market for years. I've seen firsthand how quickly home prices can change. It’s not just about wanting a bigger house; often, it's simply about keeping pace with the market. As homes become more expensive, the down payment naturally follows suit.

Mortgage Rates: Another Piece of the Puzzle

Rising home prices aren’t the only factor at play. Another major reason why down payment percentages are a bit elevated right now is mortgage rates. We’ve seen rates climb up to around 7% recently, which is significantly higher than what we were used to just a few years ago.

When mortgage rates are high, it makes borrowing money more expensive. This can impact homebuyers in a couple of ways regarding down payments:

  • Reducing Monthly Payments: Some buyers are choosing to put down a larger down payment intentionally. Why? To reduce the amount they need to borrow and, in turn, lower their monthly mortgage payments. A bigger down payment means a smaller loan, and a smaller loan means less interest paid over time. In a high-rate environment, this can be a smart strategy to make housing more affordable month-to-month.
  • Making Offers More Attractive: While the market isn't as crazy competitive as it was during the peak pandemic buying frenzy, in some areas, a larger down payment can still make your offer look stronger to a seller. It signals that you're a serious buyer with solid financial footing.

From my experience, I've noticed buyers becoming much more strategic with their finances lately. They're running the numbers, looking at different down payment scenarios, and trying to find the sweet spot where they can afford the upfront costs while also managing their monthly payments comfortably. It's a balancing act, and current mortgage rates definitely add another layer of complexity.

Remember the Pandemic Days? Down Payments Then vs. Now

It’s interesting to remember how wildly down payments swung during the pandemic. Before all that craziness, the median down payment was usually around 10%. Then, during the height of the pandemic buying frenzy in 2021, it jumped up to the 15% range. Mortgage rates were also a factor back then, but in a totally different way.

Back then, rates were incredibly low, sometimes even under 3%. This fueled intense bidding wars. To stand out from the crowd and win a home, many buyers started putting down larger down payments. It wasn't necessarily about affordability in the long run; it was more about making their offer the most appealing to sellers in a super competitive market.

Things have changed quite a bit since then. As Sheharyar Bokhari, a senior economist at Redfin, points out, “While a larger down payment can lower monthly mortgage payments and help strengthen an offer in a bidding war, bigger isn’t always better.” He’s right. The housing market in many parts of the country is now leaning more in favor of buyers. This means you, as a buyer, have more negotiating power. You don't necessarily have to empty your savings for a huge down payment to get your offer accepted. It’s becoming more about making smart financial decisions for your situation. Maybe saving some of that money for home renovations or other investments makes more sense right now. It’s all about finding what works best for your long-term financial goals.

Cash is Still King, But Less Dominant

Let’s talk about cash buyers. For a long time, cash was the ultimate power move in the housing market. And while cash purchases are still significant, they're actually becoming less common. According to the Redfin data, about 31% of homes were bought with all cash in December 2024. That’s down from 34% the year before. It might seem like a small drop, but it's a noticeable trend.

Why were cash purchases so popular in the first place, and why are they declining now?

  • High Mortgage Rates Drove Cash Purchases: The share of cash buyers actually peaked in 2023. That’s because mortgage rates were at their highest then, hitting nearly 8%, a level we hadn’t seen in two decades. When rates are that high, buyers who can afford to pay in cash are much more likely to do so. Why pay all that interest if you don't have to? It's a way to avoid those hefty monthly payments and save a lot of money on interest over the life of the loan.
  • Rates Have Come Down, and So Have Cash Purchases: Since then, mortgage rates have come down a bit and stabilized in the 6-7% range. This slight decrease has made borrowing money a little less painful, and as a result, we're seeing fewer all-cash purchases. Also, investors, who often make up a large portion of cash buyers, have been purchasing fewer homes recently, further contributing to the decline in cash sales.

Looking at the bigger picture, about 32.6% of home sales in 2024 were all-cash, which is the lowest share in the past three years. While cash is still a significant factor, it's clearly not as dominant as it was when mortgage rates were at their peak.

FHA and VA Loans: Helping Buyers Get In the Door

For many homebuyers, especially first-timers or those with moderate incomes, government-backed loans like FHA and VA loans are crucial for making homeownership a reality. Let’s take a look at how these are being used right now.

  • FHA Loans: About 15% of mortgaged home sales in December 2024 used an FHA loan. This is slightly down from 15.9% the previous year, but up from a decade-low of around 10% in mid-2022. FHA loans are insured by the Federal Housing Administration and are designed for low-to-moderate-income borrowers. They are especially popular with first-time homebuyers because they have more flexible financial requirements than conventional loans, often requiring a down payment as low as 3.5%.
  • VA Loans: The use of VA loans is slightly increasing. In December, about 6.7% of mortgaged home sales used a VA loan, up from 6.2% the year before. VA loans are guaranteed by the Department of Veterans Affairs and are available to veterans, active-duty military personnel, and surviving spouses. One of the biggest advantages of VA loans is that they often require little to no down payment.

Why are we seeing these trends with FHA and VA loans?

  • Market Shift Favors FHA Loans: Back in late 2021 and early 2022, when the market was hyper-competitive, buyers using FHA loans sometimes found it harder to get their offers accepted because sellers often preferred buyers with larger down payments and stronger financial profiles. Now that the market is more balanced, sellers are more open to offers using FHA loans.
  • Affordability Challenges: With home prices still high, even though they might not be skyrocketing like before, many buyers are finding it challenging to save up for large down payments. This makes FHA loans, with their lower down payment requirements, a more attractive and accessible option for many.

Conventional Loans Still Reign Supreme

Despite the rise in FHA and VA loan usage for some buyers, conventional loans remain the most common type of mortgage. In December 2024, nearly four out of five borrowers (78.4%) used a conventional loan. This is pretty much unchanged from the 77.9% the year before. Conventional loans are mortgages that are not backed by the government, and they typically have stricter requirements for credit scores and down payments. However, for buyers who qualify, they often offer competitive interest rates and terms.

Metro-Level Deep Dive: Where Down Payments Vary Wildly

Nationwide averages are helpful, but the housing market is incredibly local. Down payment trends can vary significantly from one city to another. Let's zoom in on some of the metro-level data from the Redfin report to see what’s happening in different parts of the country. Remember, this data is from December 2024 and covers 40 of the most populous U.S. metros.

Down Payment Percentages: The High and Low Ends

  • Highest Down Payments:
    • San Francisco, CA (26.4%): No surprise here! San Francisco consistently tops the list for highest home prices in the nation. A 26.4% down payment there is massive, translating to a median of $375,000! This reflects the extreme cost of housing in the Bay Area. In my opinion, this is driven by a combination of high incomes in the tech industry, limited housing supply, and strong investor activity.
    • Anaheim, CA & San Jose, CA (25%): Following closely behind San Francisco, Anaheim and San Jose, also in California, show typical down payments of 25%. These are also incredibly expensive markets driven by similar factors as San Francisco – tech wealth, limited inventory, and high demand. It's clear that California's coastal markets require substantial upfront investment.
    • Why So High in California? California’s high down payment percentages are a reflection of sky-high home values. To even get into the market, buyers need to bring a significant amount of cash to the table. This creates a barrier to entry for many, especially first-time homebuyers.
  • Lowest Down Payments:
    • Virginia Beach, VA (3%): Wow, 3%! That’s incredibly low compared to the national average. The median down payment here is only $10,033. Virginia Beach is a very different market from California. It’s likely that the high prevalence of VA loans in this metro, due to its large military presence, is a major factor in these lower down payments. VA loans often allow for zero down payment, bringing the average down significantly.
    • Detroit, MI (6.5%): Detroit also has a very low down payment percentage at 6.5%, with a median of $14,795. Detroit has seen a resurgence, but home prices are still relatively affordable compared to many other major metros. This affordability allows buyers to enter the market with smaller down payments.
    • Baltimore, MD (8.5%): Baltimore comes in with an 8.5% down payment, and a median of $28,400. Similar to Detroit, Baltimore's housing market is more accessible in terms of price, which contributes to lower down payment percentages.

Down Payments on the Move: Rising and Falling Metros

Interestingly, down payment percentages fell in 8 of the metros analyzed by Redfin.

  • Biggest Declines:
    • Portland, OR (-4.6 percentage points to 15.4%): A significant drop in Portland. This could indicate a cooling market in Portland, where buyers are perhaps less willing or able to put down as much as before.
    • Orlando, FL (-3 percentage points to 15%): Orlando also saw a notable decrease. Florida has been a hot market, but maybe we're seeing some moderation, leading to less pressure for larger down payments.
    • Jacksonville, FL (-2.1 percentage points to 10%): Jacksonville, another Florida metro, also experienced a drop. This could be part of a broader trend in Florida, or specific to these local markets.
  • Biggest Increases:
    • Charlotte, NC (+4.1 percentage points to 14.1%): Charlotte saw the biggest jump in down payment percentages. This could suggest a heating up of the Charlotte market, with increased competition and potentially rising home prices.
    • Minneapolis, MN (+1.4 percentage points to 11.4%): Minneapolis also saw an increase, although smaller than Charlotte's.
    • San Francisco, CA (+1.4 percentage points to 26.4%): Even in already high San Francisco, down payments increased further, reinforcing the intense pressure in that market.

FHA and VA Loan Hotspots

  • Most Prevalent FHA Loans:
    • Riverside, CA (25.4%): Even though California has high down payments overall, Riverside stands out for FHA loan usage. This might indicate a different demographic in Riverside compared to super-wealthy Bay Area metros – perhaps more first-time homebuyers or moderate-income families relying on FHA loans to get into the market in a still-expensive region.
    • Providence, RI (25.1%): Providence also shows high FHA loan usage.
    • Las Vegas, NV (24.3%): Las Vegas rounds out the top three for FHA loans.
  • Least Prevalent FHA Loans: Interestingly, the lowest FHA loan usage is also in California: San Francisco, San Jose, and Anaheim. This further highlights the two-tiered nature of the California market – ultra-high-end areas where FHA loans are less common, and more moderate areas where they are essential.
  • VA Loan Strongholds:
    • Virginia Beach, VA (39%): Virginia Beach is the absolute leader in VA loan usage, which makes total sense given its massive military presence.
    • Jacksonville, FL (16.3%) & Washington, D.C. (14.3%): Jacksonville and D.C., also with significant military or government populations, show high VA loan usage as well.
  • Least Prevalent VA Loans: Unsurprisingly, the Bay Area metros – San Jose, San Francisco, and Oakland – have the lowest VA loan usage.

All-Cash Kings and Queens (by Metro)

  • Most All-Cash Purchases:
    • West Palm Beach, FL (50.4%): Over half of all home purchases in West Palm Beach are cash! Florida in general attracts retirees and second-home buyers who often pay in cash.
    • Cleveland, OH (46%): Cleveland is surprisingly high on the cash buyer list. This might be driven by investors taking advantage of relatively affordable properties in the area.
    • Jacksonville, FL (39.3%): Jacksonville also sees a high proportion of cash purchases.
  • Least All-Cash Purchases:
    • Oakland, CA (16.2%), San Jose, CA (17.8%), Seattle, WA (18.8%): These tech-heavy, expensive metros show the lowest rates of all-cash purchases. Even wealthy buyers in these markets might prefer to leverage mortgages, perhaps for investment purposes.

The Takeaway:

So, what does all this mean for you if you're thinking about buying a home? The headline takeaway is that the typical down payment is around 16% right now. But as we've seen, “typical” is just an average. The actual down payment you'll need or choose to make will depend on a lot of factors:

  • Your Location: Down payment norms vary significantly by city and region. What's typical in San Francisco is wildly different from Virginia Beach.
  • Home Prices: The higher the home price, the larger your down payment will likely be in dollar terms, even if the percentage stays the same.
  • Mortgage Rates: High rates might incentivize some buyers to put down more to reduce monthly payments.
  • Loan Type: FHA and VA loans offer lower down payment options compared to conventional loans.
  • Your Financial Situation: Ultimately, your down payment decision should be based on your personal finances, savings, and comfort level.

The housing market is always changing, and down payment trends are just one piece of the puzzle. Staying informed, doing your homework, and making smart financial choices are the keys to navigating it successfully.

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Is It a Buyer’s or Seller’s Market in 2025?

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Trying to figure out the housing market can feel like predicting the weather. Will it be sunny for sellers, or will the clouds roll in for buyers? As of February 2025, it appears the sun is still shining for sellers. The data suggests that the U.S. housing market in February 2025 is still a seller's market, characterized by low inventory and rising home prices, although some regional variations offer glimmers of hope for buyers.

But, just because that's the overall trend doesn't mean there aren't pockets of opportunity for buyers. So, let's dive into the details and see what's really happening in the real estate world, and how you can make the best decision for your situation.

Is the Housing Market Tipping from Seller to Buyer in 2025?

Understanding the Basics: Buyer's vs. Seller's Market

Before we go any further, it’s important to understand what we mean by a buyer’s market and a seller’s market.

  • Seller's Market: This is when there are more buyers than homes available. This gives sellers the upper hand because they can often sell their homes quickly and for a higher price. Think of it as a popular concert where tickets are scarce; the price goes up.
  • Buyer's Market: This is when there are more homes available than buyers. This gives buyers more negotiating power because sellers are more likely to make concessions to attract a buyer. It's like a sale at your favorite store; there's plenty to choose from, and prices are often discounted.

A balanced market is when supply and demand are roughly equal, creating a more neutral playing field for both buyers and sellers.

The Big Picture: The U.S. Housing Market in February 2025

As mentioned earlier, the U.S. housing market in February 2025 is leaning towards a seller's market. Low inventory continues to be a major driver. Even though inventory has been increasing, it hasn't reached the point where it's a buyer's market nationally.

According to the National Association of REALTORS® (NAR), existing-home sales in January 2025 were at a seasonally adjusted annual rate of 4.08 million, which is down from December but up from the year before (NAR Existing-Home Sales). What's really telling is that the median existing-home sales price was $396,900, up 5.1% from last year. That's a pretty significant jump!

Redfin's data also shows that there were 1,562,234 homes for sale in January 2025, up 12.2% year-over-year (Redfin). However, the median days on market are at 56 days, also up from last year. This increase in days on market suggests homes are taking longer to sell, potentially indicating a softening in seller dominance, but 56 days is still relatively quick in many markets, supporting the seller's market narrative.

Here's a quick rundown of some key metrics:

  • Existing-Home Sales Rate: 4.08 million (annual)
  • Median Existing-Home Price: $396,900
  • Months of Supply (Existing): 3.5 months

All of this data points towards a market where sellers still have the advantage, although not as overwhelmingly as in the peak of the pandemic.

Digging Deeper: Home Prices, Inventory, and Demand

Let's take a closer look at some of the key factors influencing the market.

Home Prices: While prices are still rising, the rate of increase seems to be slowing down. CoreLogic's U.S. Home Price Insights for February 2025 show a year-over-year growth of 3.4% in December 2024 (CoreLogic Home Price Index). While still positive, it's not the double-digit growth we saw in previous years.

Inventory: Inventory is growing, which is good news for buyers. In January 2025 marked the 15th straight month of inventory growth, up 24.6% from a year earlier (Realtor.com). However, as we've already established, the supply of homes is still below what's considered a balanced market.

Demand: Demand appears to be restrained, partly because of mortgage rates. They're hovering around 6.5% to 7%, according to Investopedia (Investopedia). High rates, coupled with high home prices, are making it difficult for many people to afford a home. New home sales dropped 10.5% in January to 657,000, as reported by the Census Beauru.

The Unexpected Twist: Local Market Variations

This is where things get interesting. While the national trend points to a seller's market, there are significant local variations. Some areas are seeing a surge in inventory and even price declines, which could make them more favorable for buyers.

For example, some parts of Florida are experiencing increased inventory, with some data showing declining single-family and condo prices. If you're looking to buy in Florida, you might find that you have more negotiating power than you would in other parts of the country.

On the other hand, areas with a strong government presence, like Washington, D.C., and Virginia Beach, haven't seen the same softening in prices.

What the Experts Are Saying

It's always a good idea to see what the experts are predicting. Bankrate notes that most areas will still lean toward sellers in 2025 because of limited inventory. However, they also point out that markets with surged inventory might become more buyer-friendly. Fannie Mae is forecasting home price growth of 3.5% in 2025, with mortgage rates ending the year at 6.6%. NAR is predicting a 9% increase in home sales for 2025, with mortgage rates stabilizing near 6%.

My Take on the Market

Based on the data and expert opinions, here's my personal take:

  • It's still a seller's market overall. Low inventory and rising prices are still the dominant trends.
  • Mortgage rates are a key factor. They're keeping some buyers on the sidelines and preventing the market from overheating.
  • Local markets matter more than ever. Don't just look at the national numbers; pay attention to what's happening in your area.
  • Buyers need to be prepared. If you're in a seller's market, be ready to act fast and potentially make some compromises.
  • Sellers need to be realistic. While it's still a good time to sell, don't expect the bidding wars we saw during the pandemic.

Final Thoughts

Navigating the real estate market can be tricky, but by staying informed and working with experienced professionals, you can make the best decisions for your situation. The U.S. housing market in February 2025 is still a seller's market overall, but there are opportunities for both buyers and sellers to succeed. Pay attention to local market conditions, understand the key factors influencing the market, and be prepared to adapt to changing circumstances.

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Top 10 Most Expensive States to Live in the US (2025)

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If you are planning to move to a different state in the US, you might want to consider the cost of living before you pack your bags. The cost of living refers to the average amount of money you need to spend on essential expenses, such as housing, food, transportation, health care, and taxes. Depending on where you live, these costs can vary significantly and affect your quality of life and savings.

In this blog post, we will look at the 10 most expensive states to live in the US, based on the cost of living index from Forbes and other sources. The cost of living index compares the prices of goods and services across states, using the national average as a baseline of 100. Any index above 100 means that the state is more expensive than the national average, while any index below 100 means that the state is cheaper than the national average.

Top 10 Most Expensive States to Live in the US

Here are the 10 most expensive states to live in the US, along with their cost of living index and average annual expenditure on essential expenses:

1. Hawaii

Cost of living index: 179.00

Average annual expenditure: $55,491

Hawaii is the most expensive state to live in by far, with a cost of living index that is 79% higher than the national average. The main reason for this is the high cost of housing, which is driven by limited supply and high demand from tourists and residents. Hawaii also has high transportation costs, due to its remote location and dependence on imported goods. Additionally, Hawaii has high taxes, including a general excise tax that applies to most transactions.

2. California

Cost of living index: 134.50

Average annual expenditure: $46,776

California is the second-most expensive state to live in, with a cost of living index that is 34.5% higher than the national average. The main factor behind this is the high cost of housing, especially in major metropolitan areas like San Francisco, Los Angeles, and San Diego. California also has high transportation costs, due to its large size and traffic congestion. Moreover, California has high taxes, including a progressive income tax that can reach up to 13.3% for the highest earners.

3. Massachusetts

Cost of living index: 148.40

Average annual expenditure: $46,579

Massachusetts is the third-most expensive state to live in, with a cost of living index that is 48.4% higher than the national average. The main driver of this is the high cost of housing, especially in Boston and its suburbs. Massachusetts also has high health care costs, due to its high-quality medical facilities and services. Furthermore, Massachusetts has high taxes, including a 6.25% sales tax and a 5% income tax.

4. New York

Cost of living index: 125.10

Average annual expenditure: $45,273

New York is the fourth-most expensive state to live in, with a cost of living index that is 25.1% higher than the national average. The main contributor to this is the high cost of housing, especially in New York City and its surrounding areas. New York also has high transportation costs, due to its extensive public transit system and tolls. Additionally, New York has high taxes, including an 8.82% income tax for the highest earners and a 4% sales tax.

5. Alaska

Cost of living index: 124.40

Average annual expenditure: $44,941

Alaska is the fifth-most expensive state to live in, with a cost of living index that is 24.4% higher than the national average. The main reason for this is the high cost of food, which is affected by Alaska's remote location and harsh climate. Alaska also has high health care costs, due to its low population density and limited access to medical services. However, Alaska has no income tax or sales tax, which helps offset some of its expenses.

6. Maryland

Cost of living index: 119.50

Average annual expenditure: $43,921

Maryland is the sixth-most expensive state to live in, with a cost of living index that is 19.5% higher than the national average. The main factor behind this is the high cost of housing, especially in areas close to Washington D.C., Baltimore, and Annapolis. Maryland also has high transportation costs, due to its reliance on toll roads and bridges. Moreover, Maryland has high taxes, including a progressive income tax that can reach up to 8% for the highest earners and a 6% sales tax.

7. Oregon

Cost of living index: 115.10

Average annual expenditure: $42,281

Oregon is the seventh-most expensive state to live in, with a cost of living index that is 15.1% higher than the national average. The main driver of this is the high cost of housing, especially in Portland and its suburbs. Oregon also has high food costs, due to its preference for organic and local products. Furthermore, Oregon has high taxes, including a progressive income tax that can reach up to 9.9% for the highest earners and no sales tax.

8. Washington

Cost of living index: 115.10

Average annual expenditure: $42,281

Washington is the eighth-most expensive state to live in, with a cost of living index that is 15.1% higher than the national average. The main contributor to this is the high cost of housing, especially in Seattle and its surrounding areas. Washington also has high transportation costs, due to its heavy traffic and public transit fees. Additionally, Washington has high taxes, including a 6.5% sales tax and no income tax.

9. New Hampshire

Cost of living index: 115.00

Average annual expenditure: $42,251

New Hampshire is the ninth-most expensive state to live in, with a cost of living index that is 15% higher than the national average. The main reason for this is the high cost of housing, especially in areas near Boston and the coast. New Hampshire also has high health care costs, due to its aging population and limited providers. However, New Hampshire has low taxes, including no sales tax and no income tax.

10. Vermont

Cost of living index: 114.90

Average annual expenditure: $42,221

Vermont is the tenth-most expensive state to live in, with a cost of living index that is 14.9% higher than the national average. The main factor behind this is the high cost of housing, especially in Burlington and its suburbs. Vermont also has high food costs, due to its rural nature and small farms. Moreover, Vermont has high taxes, including a progressive income tax that can reach up to 8.75% for the highest earners and a 6% sales tax.

These are the 10 most expensive states to live in the US in 2023, based on the cost of living index and average annual expenditure on essential expenses. As you can see, housing costs are the most significant factor that affects the cost of living, followed by transportation, health care, food, and taxes. If you are looking for a more affordable place to live, you might want to consider some of the cheapest states to live in, such as Mississippi, Oklahoma, Kansas, Missouri, and Alabama.

Will Higher Tariffs Lead to Inflation and Higher Interest Rates in 2025?

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Have you ever gone to the grocery store and noticed that your favorite snacks suddenly cost a lot more? Or maybe you're thinking about buying a new TV, but the prices seem to have jumped up? These price increases, what we call inflation, can really hit our wallets hard. And lately, there's been a lot of talk about something called tariffs – taxes on goods coming into our country from other places.

So, the big question everyone's asking is: Will higher tariffs lead to inflation and higher interest rates? The short answer is yes, very likely, higher tariffs can indeed push up prices and potentially lead to higher interest rates. Let's dive into why this happens, and what it all means for you and me.

Will Higher Tariffs Lead to Inflation and Higher Interest Rates? Let's Break it Down

Understanding Tariffs: What Are They and Why Do They Matter?

Imagine you're buying a cool toy car made in another country. To get that toy car into our stores, sometimes our government puts a tax on it – that's a tariff. Think of it like a toll you have to pay to bring something into the country. Tariffs are usually put in place to try and help businesses here at home. The idea is that by making imported goods more expensive, people will buy more stuff made in our own country. Governments might also use tariffs to make money or to put pressure on other countries. But whatever the reason, tariffs change the price of things we buy, and that’s where inflation comes in.

How Tariffs Pump Up Inflation: The Price Hike Effect

So, how exactly do higher tariffs cause prices to go up – inflation? It’s actually pretty straightforward when you break it down. There are a few main ways tariffs can lead to goods inflation, which is when the prices of things we buy in stores go up:

  • Direct Price Increase on Imports: This one's the most obvious. When a tariff is slapped on imported goods, it's like adding an extra cost right away. Companies that bring these goods into the country have to pay that tariff. Guess who ends up paying that extra cost? Yep, you and me. Businesses often pass that extra cost onto us as higher prices. For example, if there's a tariff on imported clothes, your favorite shirt from overseas is going to cost more at the store. According to a February 2025 NPR article, proposed US tariffs could lead to higher prices on all sorts of everyday items we get from places like Canada, Mexico, and China (NPR article on Trump tariffs and higher prices). It's simple math: higher tax = higher price.
  • Domestic Companies Jack Up Prices Too: It’s not just imported stuff that gets more expensive. When tariffs make imported goods pricier, companies that make similar things here can also raise their prices! Why? Because suddenly, their stuff looks cheaper compared to the imported stuff. They know people will be more likely to buy their products now that the imported competition is more expensive. It's like when the gas station across the street raises its prices – the other stations around it might raise theirs a little too. Research from the Centre for Economic Policy Research (CEPR) supports this, suggesting tariffs give domestic producers the wiggle room to increase their prices, which adds to overall inflation (CEPR tariffs and inflation). It’s a bit sneaky, but it's just how businesses work sometimes.
  • Currency Takes a Hit, Prices Go Even Higher: Here's where things get a little more complicated, but stick with me. Sometimes, when a country puts up a lot of tariffs, it can mess with how much its money is worth compared to other countries – what we call currency value. If tariffs lead to us buying less from other countries and maybe them buying less from us (that's called a trade deficit), our currency might become weaker. A weaker currency means it costs more to buy things from other countries. So, even without the tariff itself, imported goods get more expensive. It's like a double whammy! The Bank of Canada has even pointed out that tariffs can mess up supply chains and cause inflation to jump up, especially if we can't easily find things we need here at home (Bank of Canada tariffs impact). It's like everything from overseas just got more expensive across the board.

From Inflation to Interest Rates: Why Your Loans Might Cost More

Okay, so tariffs can cause inflation – prices go up. But what about interest rates? How do they fit into all of this? Well, think of interest rates as the price of borrowing money. When interest rates go up, things like car loans, home mortgages, and even credit card bills can become more expensive. And central banks, like the Federal Reserve in the US, play a big role in setting these rates.

Central banks are like the inflation firefighters of the economy. Their main job is to keep inflation under control. When inflation starts to climb too high, what do they often do? They raise interest rates. Why? Higher interest rates make it more expensive to borrow money. This means people and businesses borrow less, spend less, and save more. Less spending can cool down the economy and help bring inflation back down to a normal level.

So, if higher tariffs cause a significant jump in goods inflation, it's pretty likely that central banks will think about raising interest rates to fight that inflation. The Federal Reserve Bank of Boston, for example, estimated that some proposed tariffs could add almost a whole percentage point to inflation! That's a big jump, and it could definitely push the Fed to consider raising rates to keep things in check (Boston Fed tariffs on inflation).

But here's the tricky part: raising interest rates can also slow down the economy. It can make it harder for businesses to grow and create jobs. So, central banks are in a tough spot. They have to balance fighting inflation with keeping the economy healthy and growing. If tariffs not only cause inflation but also hurt economic growth, central banks have a really complicated decision to make. Do they raise rates to fight inflation, even if it slows down the economy more? Or do they hold off on raising rates to support growth, even if inflation stays a bit higher? Economists at CEPR point out this exact dilemma – it's a balancing act between controlling prices and keeping the economy moving forward (CEPR monetary policy response). It's not as simple as just raising rates whenever prices go up.

Real-World Examples: Tariffs in Action

To see how this all works in real life, we can look back at when the US put tariffs on steel, aluminum, and goods from China in 2018. Studies estimate that these tariffs added a bit to inflation – somewhere between 0.1 and 0.2 percentage points to what's called core inflation (that's inflation without food and energy prices, which can jump around a lot).

At that time, inflation was already around 2.2% to 2.5%. During this period, the Federal Reserve did raise interest rates several times. Now, it's hard to say exactly how much of those rate hikes were because of the tariffs, since there were other things happening in the economy too, like strong economic growth.

But it's definitely something that economists were watching closely, and it shows how tariffs can play into the inflation and interest rate picture. You can even see the inflation data from that time from the Bureau of Labor Statistics (BLS CPI data).

Looking ahead, some experts think that new tariffs being talked about, like those proposed in 2025, could push inflation even higher – maybe up to 3% or 4%! Capital Economics, for instance, suggests tariffs could really complicate things for the Federal Reserve, making it harder for them to lower interest rates in the future because of the added inflation pressure (Capital Economics inflationary impact of tariffs).

And globally, the Bank of Canada in early 2025 even cut interest rates, but warned that a tariff war could be “very damaging” and cause persistent inflation, potentially forcing them to raise rates later on (Bank of Canada rate cuts). These examples show that tariffs aren't just abstract ideas – they have real effects on prices and interest rates in the real world.

When Tariffs Might Not Cause Big Inflation Hikes (The Exceptions)

Now, it's important to remember that the economy is complicated. It’s not always a straight line from tariffs to inflation to higher interest rates. There are times when tariffs might not lead to big jumps in inflation or interest rate hikes. Here are a few situations to keep in mind:

  • If We Don't Rely Heavily on Imports: If a country makes a lot of its own stuff, and doesn't import too much of a certain product, tariffs on those imports might not cause a huge price shock. For example, if the US puts tariffs on imported steel but already makes a lot of steel domestically, the price increase might be smaller because we can just buy more American-made steel instead. CEPR's analysis points out that how much tariffs affect inflation really depends on how much a country relies on trade in the first place (CEPR tariffs and inflation). If we can easily switch to buying local, the tariff impact is less.
  • If Our Money Gets Stronger: Sometimes, other things happen in the world that can make a country's money stronger. If a country's currency becomes more valuable, it can actually offset some of the price increases from tariffs. A stronger currency makes imports cheaper, which can help keep inflation in check, even with tariffs. The Boston Fed mentioned that currency changes can be a factor when looking at the impact of tariffs on inflation (Boston Fed tariffs on inflation). So, currency strength can act as a buffer against tariff-driven inflation.
  • If Central Banks Decide Not To Raise Rates: Even if tariffs cause some inflation, central banks might choose not to raise interest rates if they think the inflation is only temporary or if the economy is already weak. Remember the Bank of Canada example? They actually cut rates even with tariff risks, because they were more worried about economic growth than inflation at that moment (Bank of Canada rate cuts). Central banks have to make tough calls, and sometimes fighting inflation isn't their top priority, especially if the economy is struggling.

Who Feels the Pinch? Sector-by-Sector Impacts

It’s also worth noting that tariffs don't affect every part of the economy equally. If tariffs are placed on a wide range of goods – like a broad-based tariff on everything coming into the country – the impact on inflation can be much bigger. The Budget Lab at Yale University estimates that a 10% tariff on all imports could raise consumer prices quite a bit, anywhere from 1.4% to a whopping 5.1%! (Yale Budget Lab tariffs). That's a significant jump that would be felt by pretty much everyone.

On the other hand, if tariffs are only put on specific goods, like just steel or just certain electronics, the impact might be more limited to those specific industries. For example, tariffs on steel might mainly affect companies that use a lot of steel, like car manufacturers or construction companies. The price of cars and buildings might go up a bit, but the price of other things might not change much. So, the breadth and scope of the tariffs really matter in determining how widespread the inflationary effects will be.

Wrapping It Up: Tariffs, Inflation, and Your Wallet

So, to bring it all together: will higher tariffs lead to inflation and higher interest rates? Based on what we know from economic research and real-world examples, the answer is likely yes. Higher tariffs can definitely contribute to goods inflation by making imported goods more expensive, giving domestic companies room to raise prices, and potentially weakening our currency, which makes imports even pricier. This inflation, in turn, can push central banks to raise interest rates as they try to keep prices under control.

However, it's not a guaranteed outcome every time. The actual effect of tariffs on inflation and interest rates depends on lots of things – how much we rely on imports, how strong our currency is, and how central banks decide to respond. But the general trend is clear: tariffs tend to push prices up, and that can have ripple effects throughout the economy, potentially making borrowing more expensive for all of us.

As someone trying to understand what's happening in the economy, I think it's crucial to see how policies like tariffs, which might seem simple on the surface, can have complex and sometimes unexpected consequences for our everyday lives. It's not just about trade numbers and economic theories – it's about the prices we pay at the store, the interest rates on our loans, and the overall health of our economy. Keeping an eye on these connections helps us all be more informed and make better decisions in our own financial lives.

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Today’s Mortgage Rates: February 27, 2025 – Rates Continue to Drop

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As of February 27, 2025, today's mortgage rates show a slight decrease, with the average 30-year fixed mortgage rate sitting at 6.32%. This drop of three basis points from the previous day highlights a positive trend, as rates have fallen by 32 basis points in just two weeks. For potential home buyers and those considering refinancing, this may present an advantageous time to explore new opportunities in the housing market.

Today's Mortgage Rates: February 27, 2025 – Rates Continue to Drop

Key Takeaways

  • Current Average Rates:
    • 30-Year Fixed: 6.32%
    • 15-Year Fixed: 5.64%
    • 20-Year Fixed: 5.96%
    • 30-Year VA: 5.75%
  • Refinance Rates:
    • 30-Year Fixed Refinance: 6.28%
    • 15-Year Fixed Refinance: 5.63%
  • Notable Trend: Rates are slowly decreasing, but future direction remains uncertain.

Current Mortgage Rates

According to Zillow, here are the current national averages for mortgage rates:

Loan Type Current Rate (%)
30-Year Fixed 6.32%
20-Year Fixed 5.96%
15-Year Fixed 5.64%
5/1 ARM 6.62%
7/1 ARM 6.49%
30-Year VA 5.75%
15-Year VA 5.25%
5/1 VA 5.93%
30-Year FHA 6.06%
15-Year FHA 5.50%

Today's Mortgage Refinance Rates

Today’s mortgage refinance rates are as follows:

Refinance Loan Type Current Rate (%)
30-Year Fixed Refinance 6.28%
20-Year Fixed Refinance 5.99%
15-Year Fixed Refinance 5.63%
5/1 ARM 6.73%
7/1 ARM 6.84%
30-Year VA Refinance 5.72%
15-Year VA Refinance 5.38%
5/1 VA Refinance 6.09%
30-Year FHA Refinance 6.06%
15-Year FHA Refinance 5.50%

Refinance rates can often be slightly higher than purchase rates, indicating the necessity for borrowers to remain vigilant and well-informed.

Understanding Mortgage Payments for Today’s Rates

When purchasing a home, understanding the monthly payment is crucial for budgeting and financial planning. Below, you will find estimates for monthly payments based on varying loan amounts using today’s rates.

Monthly Payment on $150,000 Mortgage

  • 30-Year Fixed at 6.32%: Approximately $968
  • 15-Year Fixed at 5.64%: Approximately $1,230
  • 20-Year Fixed at 5.96%: Approximately $1,084

Monthly Payment on $200,000 Mortgage

  • 30-Year Fixed at 6.32%: Approximately $1,290
  • 15-Year Fixed at 5.64%: Approximately $1,640
  • 20-Year Fixed at 5.96%: Approximately $1,445

Monthly Payment on $300,000 Mortgage

  • 30-Year Fixed at 6.32%: Approximately $1,935
  • 15-Year Fixed at 5.64%: Approximately $2,460
  • 20-Year Fixed at 5.96%: Approximately $2,168

Monthly Payment on $400,000 Mortgage

  • 30-Year Fixed at 6.32%: Approximately $2,580
  • 15-Year Fixed at 5.64%: Approximately $3,280
  • 20-Year Fixed at 5.96%: Approximately $2,895

Monthly Payment on $500,000 Mortgage

  • 30-Year Fixed at 6.32%: Approximately $3,225
  • 15-Year Fixed at 5.64%: Approximately $4,100
  • 20-Year Fixed at 5.96%: Approximately $3,623

These figures serve as a reference, but actual payments can vary based on factors such as mortgage insurance, property taxes, and homeowners insurance.

How Do Mortgage Rates Work?

Mortgage rates are the cost associated with borrowing money from lenders to purchase a home. Understanding the different types of mortgage rates and their dynamics is vital for making informed financial decisions.

  • Types of Mortgage Rates:
    • Fixed-Rate Mortgages: These loans remain at a consistent interest rate throughout the mortgage term. For example, a 30-year fixed mortgage with a rate of 6% will have that interest rate locked in for the entire duration.
    • Adjustable-Rate Mortgages (ARMs): These rates start lower, but they adjust periodically based on market conditions. For example, a 5/1 ARM may have a fixed rate for the first five years and then adjust annually thereafter.

Determining Mortgage Rates

Mortgage rates are influenced by various controllable and uncontrollable factors:

  • Controllable Factors:
    • Credit Score: This is one of the most critical factors. Higher credit scores can lead to lower interest rates. It’s advisable to check your credit report for errors and ensure it reflects your best financial practices.
    • Debt-to-Income Ratio (DTI): This ratio compares your monthly debt payments to your gross monthly income. Lenders prefer a lower DTI, indicating you have enough income to manage monthly payments.
    • Down Payment Size: The amount you pay upfront can significantly impact mortgage rates. Larger down payments reduce the lender’s risk and may provide access to lower rates.
  • Uncontrollable Factors:
    • Economic Environment: The state of the economy can influence mortgage rates. For instance, during economic downturns, rates tend to fall to encourage borrowing and stimulate growth.
    • Federal Reserve Policies: The Federal Reserve’s monetary policy decisions significantly impact interest rates, including mortgage rates.

What Influences Mortgage Rates?

Various macroeconomic factors can influence mortgage rates:

  • Inflation Rates: If the inflation rate is high, lenders may increase mortgage rates to compensate for the reduced value of future payments.
  • Bond Market Performance: Mortgage rates often move in relation to the yields on 10-year Treasury bonds. If investors expect rates to rise, they may sell bonds, leading to higher yields and, eventually, higher mortgage rates.
  • Global Financial Trends: Events in international markets can create fluctuations in U.S. mortgage rates. Economic instability in foreign countries can lead to lower rates as capital flows into the U.S. dollar and its associated investments.

Current Mortgage Rates: Frequently Asked Questions

  1. Which banks offer the lowest mortgage rates? According to the 2023 Home Mortgage Disclosure Act (HMDA) data, banks like Citibank, Wells Fargo, and USAA are known for offering competitive rates. However, it’s wise to shop around and compare offers from both banks and credit unions.
  2. Is 2.75% a good mortgage rate? Yes, a 2.75% rate is exceptional in today’s market, but likely only achievable through assumable mortgages from sellers who locked in lower rates years ago.
  3. What is the lowest-ever mortgage rate? The lowest average ever recorded for a 30-year fixed mortgage was 2.65% in early 2021—an unlikely level to be repeated in the near future.
  4. When should I consider refinancing my mortgage? Refinancing can be beneficial when you can secure a rate that is at least 1% lower than your current rate, but personal financial goals should dictate the timing.

Understanding the Home Buying Process

Knowing about mortgage rates is only one aspect of home buying. Understanding the entire process, including budgeting for additional costs that come with home ownership is essential.

  • Home Inspection Costs: Before finalizing any purchase, it's wise to invest in a home inspection. These typically range from $300 to $500, depending on the size of the home and the local market.
  • Closing Costs: Often, closing costs can account for 2% to 5% of the loan amount. This includes loan processing, underwriting, and title insurance.
  • Property Taxes: Depending on where you live, these can significantly impact your monthly payments.

It's vital for buyers to prepare financially before entering the market.

The Importance of Prequalification

Before you begin shopping for homes, consider going through the mortgage prequalification process. This will give you:

  • Understanding of Your Budget: Knowing how much you can borrow makes it easier to narrow down your home search.
  • Strengthened Position: Being prequalified signals to sellers that you are a serious buyer, potentially giving you an edge in a competitive market.

Summary:

With today's mortgage rates showing a slight decline, potential homebuyers and those looking to refinance might find this an opportune time to make moves. The economic landscape, however, remains uncertain, so staying informed and proactive is crucial in navigating home financing successfully.

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Real Estate Investing

With mortgage rates fluctuating, investing in turnkey real estate

can help you secure consistent returns.

Expand your portfolio confidently, even in a shifting interest rate environment.

Speak with our expert investment counselors (No Obligation):

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2025’s Most Affordable Places to Buy a Home in the U.S.

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Is the dream of owning your own home starting to feel like a distant fantasy? You're not alone. Between rising prices and interest rates that seem to have a mind of their own, stepping onto the property ladder feels more like scaling Mount Everest these days. But before you throw in the towel and resign yourself to renting forever, let's talk about some good news.

Believe it or not, the most affordable places for buying a home in 2025 might be closer than you think, and homeownership is still a realistic goal for many. In fact, recent data suggests that in over half of the housing markets across the US, buying a home could actually be more affordable than renting. Yes, you read that right!

Now, before you start packing your bags and searching for moving boxes, let's unpack this a bit (pun intended!). According to a recent report from ATTOM, a leading property data and analytics firm, owning a home is financially less burdensome than renting a three-bedroom property in a significant portion of the country.

This might come as a surprise in today's market, but let's delve into why this is the case and pinpoint those golden locations where your homeownership dreams can still take root without breaking the bank.

Most Affordable Places for Buying a Home in 2025: Is the American Dream Still Alive?

The Great Affordability Paradox: Owning vs. Renting in 2025

Let's be honest, the headlines often scream about unaffordable housing, and it's easy to feel discouraged. We hear about bidding wars, sky-high prices, and the struggle to save for a down payment. But the reality is nuanced, and focusing solely on price tags paints an incomplete picture. The ATTOM 2025 Rental Affordability Report sheds light on a crucial aspect: affordability isn't just about the initial price, it's about what portion of your income goes towards housing costs.

This report, which analyzed 341 county-level markets with sufficient data, reveals a fascinating trend. While both owning and renting are putting a strain on household budgets – often consuming a hefty 25% to 60% of average wages – the scales are tipping in favor of homeownership in many areas.

Specifically, in nearly 60% of the markets studied, the major expenses associated with owning a typical single-family home require a smaller chunk of the average paycheck compared to renting a three-bedroom residence. This is a significant finding, and it challenges the prevailing narrative of renting being the more economical option.

Rob Barber, CEO of ATTOM, puts it quite bluntly: “Buying or renting a home in the U.S. these days can be like searching for a diamond in a pile of marbles, and it’s only getting worse in most markets as the cost of both goes up.” He's right – it’s tough out there. However, he also highlights the silver lining: “…in most parts of the country, homeownership is somewhat more attainable for those who can gather the necessary resources to cover down payments…”

The down payment hurdle remains a significant barrier, especially when we're talking about figures that can easily surpass $200,000 in some markets. But once you clear that hurdle, the ongoing costs of ownership can surprisingly be more manageable than rent in many places.

Why is Owning Becoming More Affordable Than Renting in Some Areas?

You might be scratching your head right now. How can owning a home, with all its associated costs like mortgage payments, property taxes, insurance, and potential maintenance, be cheaper than renting? The answer lies in the dynamics of the housing market and how prices and rents are behaving differently.

The ATTOM report highlights a crucial trend: median home prices have generally risen faster over the past year than average rents across the country. In fact, in 66% of the counties analyzed, home prices have increased more or declined less than rents for three-bedroom properties. This means that while home prices might seem intimidatingly high upfront, the rate of increase in rents is catching up, and in some cases, exceeding the pace of home price growth.

Think about it this way: your mortgage payment, once locked in (especially with a fixed-rate mortgage), remains relatively stable over time. Property taxes and insurance can fluctuate, but they are generally more predictable than rent hikes. Rent, on the other hand, is subject to market forces and landlord decisions, and we've seen significant rent increases in many areas over the past few years. This dynamic is shifting the affordability equation in favor of homeownership in certain regions.

Regional Affordability Hotspots: Where Homeownership Still Makes Sense

The affordability picture isn't uniform across the US. As the ATTOM report points out, there are significant regional disparities. If you're looking for the most affordable places to buy a home in 2025, you should definitely set your sights on the Midwest and the South.

  • The Midwest is the King of Affordable Homeownership: According to the report, in a whopping 80% of the Midwestern counties analyzed, owning a home requires a smaller portion of average wages compared to renting. This region is consistently highlighted as the most affordable for homebuyers. Think of states like Ohio, Michigan, Illinois, and Pennsylvania (parts of it considered Midwestern). These areas often have a lower cost of living overall, which translates to more affordable housing markets.
  • The South is a Strong Contender: The South comes in second, with around 60% of counties favoring homeownership affordability over renting. States like Alabama, Florida, and Texas (especially outside of major metropolitan hubs like Austin) offer pockets of affordability.
  • The Northeast is Mixed: The Northeast presents a more balanced picture, with about half of the counties analyzed showing homeownership as the more affordable option. While areas around major cities like New York City can be incredibly expensive, there are still pockets of relative affordability in states like Pennsylvania and even parts of New York state outside of the city center.
  • The West: Renters' Paradise (Mostly): The West stands out as the outlier. In this region, renting is generally the financially easier choice. Around 80% of western markets favor renting over buying. This is largely driven by the high home prices in states like California, Hawaii, and Colorado, which often outpace local wage growth significantly.

Diving Deep: Counties Where Owning is Significantly More Affordable

Let's get specific and pinpoint some of the counties where the gap between owning and renting affordability is the widest. These are the locations where your homeownership dollar can stretch the furthest.

Remember, these figures are based on data from ATTOM and the Bureau of Labor Statistics, comparing major homeownership expenses (including mortgage, taxes, insurance, etc.) to average local wages, and average three-bedroom rents to average local wages.

Counties with the Biggest Affordability Gaps Favoring Homeownership:

County Owning (% of Wages) Renting (% of Wages) Affordability Gap
Suffolk County, NY (outside NYC) 59% 159% 100%
Atlantic County, NJ (Atlantic City) 48% 111% 63%
Collier County, FL (Naples) 79% 127% 48%
Indian River County, FL (Vero Beach) 47% 83% 36%
Charlotte County, FL (Punta Gorda) 43% 69% 26%
  • Suffolk County, NY (Outside NYC): This might surprise you given New York's reputation for high costs. But outside of the immediate city, in areas like Long Island's Suffolk County, the report highlights a massive disparity. Owning a home here consumes about 59% of average local wages, while renting a three-bedroom property devours a staggering 159%! This suggests that while initial home prices might be high, rents are even more out of sync with local incomes.
  • Atlantic County, NJ (Atlantic City): Atlantic City and its surrounding areas in Atlantic County, NJ, also show a significant gap. Owning requires about 48% of wages, while renting eats up 111%. This could be due to a variety of factors, including the local economy and the type of rental properties available.
  • Florida Counties (Collier, Indian River, Charlotte): Several Florida counties, including Collier (Naples), Indian River (Vero Beach), and Charlotte (Punta Gorda), pop up as surprisingly more affordable for homeowners. While Florida has seen a surge in popularity and prices, in these specific areas, the report suggests that owning still offers a better affordability proposition than renting.

Large Counties (Population over 1 Million) with Affordability Gaps Favoring Homeownership:

County Owning (% of Wages) Renting (% of Wages) Affordability Gap
Riverside County, CA 71% 91% 20%
Wayne County, MI (Detroit) 15% 22% 7%
Cook County, IL (Chicago) 31% 36% 5%
Allegheny County, PA (Pittsburgh) 21% 25% 4%
  • Riverside County, CA: Even in California, known for its expensive housing, Riverside County stands out. Owning a home here takes about 71% of wages, while renting requires 91%. This suggests that while still pricey, homeownership in Riverside County might be a slightly less painful financial burden compared to renting.
  • Wayne County, MI (Detroit): Detroit, specifically Wayne County, emerges as a surprising leader in affordability. Owning a home in Wayne County consumes only 15% of average wages, while renting takes 22%. Detroit's revitalization and relatively lower housing costs make it a very attractive option for budget-conscious homebuyers.
  • Cook County, IL (Chicago) & Allegheny County, PA (Pittsburgh): Major metropolitan areas like Chicago (Cook County) and Pittsburgh (Allegheny County) also show a slight advantage for homeowners, with owning being marginally more affordable than renting.

Counties Where Renting Holds the Affordability Edge

Of course, there are areas where renting remains the more financially sound choice. These are often high-cost urban centers where home prices are exceptionally high.

Counties with the Biggest Affordability Gaps Favoring Renting:

County Renting (% of Wages) Owning (% of Wages) Affordability Gap
Alameda County, CA (Oakland) 48% 87% 39%
Honolulu County, HI 64% 103% 39%
San Mateo County, CA 31% 69% 38%
Santa Clara County, CA (San Jose) 27% 64% 37%
Loudoun County, VA 45% 81% 36%
  • California Counties (Alameda, San Mateo, Santa Clara): No surprise here, California dominates the list of counties where renting is more affordable. Alameda County (Oakland), San Mateo County, and Santa Clara County (San Jose), all in the Bay Area, show significant gaps favoring renters. The tech boom and subsequent sky-high home prices have made homeownership incredibly expensive in this region.
  • Honolulu County, HI: Hawaii, with its limited land and high demand, also makes renting the more affordable option. Honolulu County shows a substantial gap, with renting consuming 64% of wages compared to 103% for owning.
  • Loudoun County, VA: Even areas outside of major metros like Washington, DC, can be surprisingly expensive. Loudoun County, VA, near DC, shows a significant gap favoring renting, suggesting that home prices in the DC suburbs are outpacing rent increases.

The Most Affordable Markets for Owning: Midwest Leads the Way

If you're solely focused on finding the absolute most affordable markets for owning a home, the Midwest is your best bet. The report highlights counties where major ownership expenses consume the smallest percentage of average local wages.

Most Affordable Counties for Owning:

County Owning (% of Wages)
Jefferson County, AL (Birmingham) 15%
Wayne County, MI (Detroit) 15%
Peoria County, IL 15%
Montgomery County, AL 16%
Mobile County, AL 17%
  • Alabama Counties (Jefferson, Montgomery, Mobile): Alabama takes the crown for affordability, with Jefferson County (Birmingham), Montgomery County, and Mobile County topping the list. These areas offer incredibly accessible homeownership, requiring only 15% to 17% of average wages for major ownership expenses.
  • Wayne County, MI (Detroit) & Peoria County, IL: Detroit (Wayne County) continues to impress with its affordability, tied at the top of the list. Peoria County, IL, also joins the ranks as one of the most affordable places to own a home.

Affordable Large Counties (Population over 1 Million) for Owning:

County Owning (% of Wages)
Wayne County, MI (Detroit) 15%
Allegheny County, PA (Pittsburgh) 21%
Cuyahoga County, OH (Cleveland) 21%
Harris County, TX (Houston) 26%
Philadelphia County, PA 28%
  • Detroit, Pittsburgh, Cleveland, Houston, Philadelphia: These major cities represent a mix of Midwestern, Southern, and Northeastern locations, all offering relatively affordable homeownership compared to other large metros.

Most Affordable Rental Markets: Midwest Still Dominates

Unsurprisingly, the Midwest also shines when it comes to affordable rental markets. If you're not quite ready to buy, or prefer the flexibility of renting, these areas offer the most bang for your buck.

Most Affordable Counties for Renting:

County Renting (% of Wages)
Black Hawk County, IA (Waterloo) 20%
Wayne County, MI (Detroit) 22%
Genesee County, MI (Flint) 23%
Jefferson County, AL (Birmingham) 23%
Hinds County, MS (Jackson) 23%
  • Iowa, Michigan, Alabama, Mississippi: States like Iowa, Michigan, Alabama, and Mississippi offer the most affordable rental markets, with Black Hawk County, IA (Waterloo) leading the pack, requiring only 20% of average wages for a three-bedroom rental.

Affordable Large Counties (Population over 1 Million) for Renting:

County Renting (% of Wages)
Wayne County, MI (Detroit) 22%
Cuyahoga County, OH (Cleveland) 25%
Allegheny County, PA (Pittsburgh) 25%
Philadelphia County, PA 27%
Santa Clara County, CA (San Jose) 27%
  • Detroit, Cleveland, Pittsburgh, Philadelphia, San Jose (Surprisingly): While San Jose (Santa Clara County) is expensive for homeownership, it appears more affordable for renting compared to other California markets, ranking among the most affordable large counties for renters nationally.

Wage Growth vs. Housing Cost Growth: A Critical Factor

The affordability picture is constantly evolving, and understanding how wages are keeping pace (or not keeping pace) with housing costs is crucial. The ATTOM report provides insights into this dynamic as well.

  • Wages Growing Faster Than Rents in Most Markets: Good news! In 72% of the counties analyzed, average wages are increasing more or declining less than average rents. This is a positive sign for renters, as their earning power is generally keeping up with or exceeding rent increases in a majority of markets.
  • Home Prices Increasing Faster Than Wages in Half the Nation: However, the flip side is that in 52% of counties, median home prices are going up more or declining less than average wages. This means that for potential homebuyers in these areas, affordability is still a challenge, as home prices are outpacing wage growth in a slight majority of markets.

Important Note: While wages are generally growing faster than rents, and in some areas, homeownership is becoming relatively more affordable, the overall housing affordability situation remains challenging for many Americans. The report emphasizes that major homeownership expenses require more than one-third of average local wages in 68% of the counties analyzed, and average rents require more than one-third of wages in 76% of counties. Housing costs are still a significant burden for a large portion of the population.

My Takeaway: Homeownership Dreams Are Still Achievable, Especially in the Heartland

As someone who has been observing the real estate market for years, I find these findings both encouraging and realistic. While the national headlines might paint a bleak picture of housing affordability, the ATTOM 2025 Rental Affordability Report offers a more grounded and localized perspective. It clearly demonstrates that the most affordable places for buying a home in 2025 are concentrated in the Midwest and to a lesser extent, the South.

If you're serious about homeownership and are willing to consider locations outside of the ultra-expensive coastal markets, your dream is absolutely within reach. Cities like Detroit, Birmingham, Pittsburgh, and Cleveland are not just affordable; they are also experiencing revitalization and offer vibrant communities with a lower cost of living overall. These are places where your hard-earned money can go further, not just in housing, but in your overall quality of life.

Of course, the down payment remains a major hurdle. Saving for that 20% down payment (or even a smaller percentage) is still a significant undertaking. But knowing that once you overcome that hurdle, your monthly housing costs might actually be less than renting in many of these affordable markets is a powerful motivator.

So, don't let the national housing doom and gloom discourage you. Do your research, explore the markets highlighted in this report, and consider broadening your location horizons. The American dream of homeownership is still alive and well, particularly in the heartland of the country. It might just require a shift in perspective and a willingness to explore opportunities in the most affordable places for buying a home in 2025.

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Invest in high-quality, cash-flowing properties in the best markets before prices rise.

Let our expert team help you secure turnkey rental properties in emerging markets with strong appreciation potential.

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The Rich vs Poor Mindset: Which Mindset Do You Have in 2025?

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What is the difference between the rich vs poor mindset? How do the successful differ from the rest of us? So many people do not obtain financial freedom because they do not have one thing: the right mindset. Everything starts with how you think about money, wealth, and success. It is not a matter of luck, birth, or connections.

The biggest differences between rich and poor people can be traced back to mindset, outlook, and behavior. The rich and the poor don’t only differ in how much they have in their pocket, but also in how they think. Rich people have a way of thinking that is different from poor and middle-class people.

They think differently about money, wealth, themselves, other people, and life.  By doing so, you will have some alternative beliefs in your mind from which to choose. In this way, you can catch yourself thinking as poor people do and quickly switch over to how rich people think.

A positive attitude, focusing on doing the right thing overlooking good, becoming a continual learner and careful risk management are all differences between the rich and poor. This reduces their odds of becoming poor after disaster strikes, and it helps them achieve their financial goals over the long term.

A rich mindset will tell you to be self-sufficient & build multiple streams of income. It will tell you to build a team of smarter people than you to leverage the efforts of talented people. The mindset of the rich is the most decisive reason why “the rich keep getting richer, while the poor get poorer.” Bill Gates has been quoted as saying, “If we weren't still hiring great people and pushing ahead at full speed, it would be easy to fall behind and become some mediocre company.”

So, which mindset do you have? Let's examine twelve startling differences between how rich people think and how poor or middle-class people think.

1. Rich People Believe “I Create My Life”

Poor mindsets believe “Life happens to me.”

If you want to create wealth, it is imperative that you believe that you are at the steering wheel of your life; that you create every moment of your life, especially your financial life.

Instead of taking responsibility for what's going on in their lives, poor people choose to play the role of victim. Of course, any “victim's” predominant thought process is “poor me.” And presto, through the law of intention that's literally what they get; “poor,” as in money, me.

Here's some homework I promise will change your life. For the next seven days, I challenge you not to complain at all. Not just out loud, but in your head too. I've given this little challenge to thousands of people and several hundred have personally told me that this exercise completely transformed their lives.

2. Rich vs Poor Mindset: Rich Play the Money Game to Win

Rich vs Poor Mindset

 

Poor mindsets play the money game not to lose.

Poor people play the money game on defense rather than offense. Let me ask you, if you were to play any sport or any game strictly on defense, what are the chances of you winning that game? Most people agree; slim and none.

Yet, that's exactly how most people play the money game. Their primary concern is survival and security, not wealth and abundance. So, what is your goal? What is your real objective? What is your true intention?

Rich people's big goal is to have massive wealth and abundance. Poor people's big goal is to have “enough to pay the bills…” on time would be a miracle! Again, let me remind you of the power of intention. When your objective is to have enough to pay the bills, that's exactly how much you'll get; just enough to pay the bills and usually not a cent more. You get what you truly intend to get.

3. Rich Mindsets Are Committed to Being Rich

rich vs poor mindset

 

Poor mindsets are uncommitted to being rich.

Most of us have good reasons as to why it would be wonderful to be rich, but what about the other side of the coin? Are there reasons why it might not be so great to be rich or go through the process of trying to get rich?

Each of us has a file on wealth in our minds. This file contains our personal beliefs including why being wealthy would be great. But for many people, their file also includes information as to why being rich might not be so great. These people have mixed internal messages around money and especially wealth. These mixed messages are one of the biggest reasons that most people never become rich.

The #1 reason most people don't get what they want is they don't know what they want. Rich people are totally clear they want wealth. They are unwavering in their desire. They are fully committed to creating wealth. They will do “whatever it takes” to have wealth as long as it's moral, legal, and ethical. Rich people do not send mixed messages to the universe. Poor people do.

I hate to break the news to you, but getting rich is not a “stroll in the park.” It takes focus, expertise, 100% effort, and “never say die” perseverance. You have to commit to it, both consciously and subconsciously. You have to believe in your heart you can do it and you deserve it. If you are not fully committed to creating wealth, chances are you won't.

4. Rich vs Poor Mindset: Rich People Think Big

 

Poor people think small.

We once had a trainer teaching at one of our seminars who went from a net worth of $250 thousand to over $600 million in only 3 years. When asked his secret he said, “Everything changed the day I began to think big.”

Another way of understanding this is to answer the following question: How many people do you serve or affect?

For instance, in my business, some trainers enjoy speaking to groups of 20, others are comfortable with 100, others like an audience of 500, still others want 5000 people or more in attendance. Is there is a difference in income between these trainers? You bet there is.

Who are you? How do you want to live your life? How do you want to play the game?

Do you want to play in the big leagues or the little league, in the majors or the minors?

Will you play big or play small? It's your choice.

But hear this. It's not about you. It's about living your mission. It's about living true to your purpose. It's about adding your piece of the puzzle to the world. It's about serving others.

Most of us are so stuck in our egos that everything revolves around “me, me, and more me.” But again, it's not about you, it's about adding value to other people's lives. It's your choice. One road leads to being broke and miserable, the other leads to money, meaning, and fulfillment.

It's time to stop hiding out and start stepping out. It's time to stop needing and start leading. It's time to start being the star that you are.

5. Rich Mindsets Are Bigger Than Their Problems

 

Poor people are smaller than their problems.

Getting rich is not a stroll in the park. It's a journey that is full of obstacles, twists, and detours. The simple fact is, success is messy. The road is fraught with pitfalls and that's why most people don't take it. They don't want the problems.

Therein lies one of the biggest differences between rich people and poor people. Rich and successful people are bigger than their problems while poor and unsuccessful people are smaller than their problems.

Poor people will do almost anything to avoid anything that looks like it could be a problem. They back away from challenges. The irony is that in their quest to make sure they don't have problems, they have the biggest problem of all… they're broke and miserable.

The secret to success is not to try to avoid or shrink your problems; it's to grow yourself so you're bigger than any problem.

It's just an everyday occurrence, like getting dressed or brushing your teeth. Whether you are rich or poor, playing big or playing small, problems do not go away. If you're breathing, you will always have so-called “problems.”

What's important to realize is that the size of the problem is never the real issue. What matters is the size of you!
Remember, your wealth can only grow to the extent that you do! The idea is to grow yourself to a place where you can overcome any problems that get in your way of creating wealth and keeping it once you have it.

Rich people do not back away from problems, do not avoid problems, and do not complain about problems. Rich people are financial warriors and when a warrior is confronted with a challenge they shout: BRING IT ON!

6. Rich vs Poor Mindset: Rich People Focus on Opportunities

 

Poor people focus on problems. Rich people see an opportunity in every situation and work to explore it. 

Rich mindsets see potential growth. Poor mindsets see potential loss.

Rich mindsets focus on the rewards. Poor mindsets focus on the risks.

We're not merely talking about “positive thinking” here, we're talking about a habitual way of seeing the world. Poor people come from fear. Their minds are constantly scanning for what's wrong or what could go wrong in any situation. Their primary mindset is “What if it doesn't work?” or, more bluntly, “It won't work.” Rich people, as we discussed earlier, take responsibility for creating their life and come from the mindset, “It will work because I'll make it work.”

In the financial world, as in most other areas, the risk is directly proportionate to reward; generally, the higher the reward, the higher the risk. People with rich mentalities are willing to take that risk. They work to exploit opportunities even when they don’t have the expertise for it.

Rich people expect to succeed. They have confidence in their abilities, they have confidence in their creativity and they believe that should the “doo-doo hit the fan”, they can always make their money back or succeed in another way. They look for ways to educate themselves to be better prepared for the task.

On the other hand, poor people expect to fail. They lack confidence in themselves and their abilities, and should things not work out, they believe it would be catastrophic.

You have to do something, buy something, or start something to succeed financially. You have to see profit opportunities all around you instead of focusing on ways of losing money.

7. Rich Mindsets Always Focus on Positive Attitude

 

Poor people lack a positive attitude.

Poor is a mindset. It is a lack of hope.

Dave Ramsey, the national best-selling author, once explained the difference between broke and poor is attitude. The broke have no money right now but have a positive outlook; they believe they can do better and can do better when they work toward doing something better. They think they’re doomed to remain in poverty. The little man can’t get ahead. The poor are oppressed by the rich.

They can’t save money because they think it will be taken from them, and they waste money they do save or receive as a windfall on pleasures because they don’t think they can do better by doing anything else. For example, when you think you can’t do better, you won’t finish that challenging degree program or take a second job to get out of debt because there is no point.

Or they think they can’t be wealthy because they believe the lie that most millionaires inherited their wealth and class. The truth is that 80 percent of the rich are the first generation, and less than 3 percent inherited enough to become millionaires.

A negative attitude can hinder those with even a good income. A classic case is being afraid of investing, so you leave money in savings or CDs and earn less than the rate of inflation. Another is seeing money as immoral, so they give it to charities and “needy” friends and family.

They have nothing themselves, ensuring they have no savings for their emergencies or retirement. This is why long-term financial success requires a positive mental outlook. Setbacks like unemployment or massive medical bills are seen as temporary and then worked through.

8. Rich Mindsets Do Not Flaunt Their Wealth

 

People with rich mindsets lead frugal lives.

The public perception of the rich is that they flaunt their wealth. We are lied to when they show “the rich” wearing designer clothes, taking fancy vacations they brag about, and having lavish parties. In reality, a very small number of the truly rich ever live this way, and most who do live this way are high-income earners who have almost nothing saved.

Once the windfall of a signing bonus or record contract is used up, they have nothing. Unfortunately, this image is compounded by marketing efforts to say you have to spend money this way to become rich. Yet wasting money on fancy cars, expensive trips and other trappings of success prevents you from doing so.

That perpetual 500 dollars month car payment and the largest house you could afford to prevent you from becoming wealthy. Most real millionaires live in a house they can afford, and they prioritize paying off the mortgage. They own their cars for years and avoid car payments, though they may buy a used luxury car and keep it running for ten years.

They are content with what they have while they build their businesses and portfolios. And they earn their money honestly. There is a popular myth that most millionaires are liars and cheats. One lie is that the rich don’t pay their taxes, though the top 1 percent pays 40 percent of the taxes.

Another lie is that the rich are dishonest scammers, that they only got wealthy by hurting others. In reality, surveys show that the number one trait of millionaires that they consider key to success is integrity. You can’t stay in business if you’re known for scamming customers or being sued for fraud all the time. Nor can you create the quality relationships that are necessary to build a business network if you’re a liar or cheat.

9. Rich Mindsets Understand The Value of Education

 

Poor mindsets are oblivious to the importance of constant learning or education.

Rich mindsets learn and update their skills throughout their lives.

Education remains a major determinant of lifetime income. Note that this doesn’t mean you have to go to an expensive private college or earn an advanced degree. However, you nearly guarantee you’ll be poor if you don’t finish high school.

One difference between the rich vs poor mindset is that the rich understand the value of knowledge. They’re not part of the 40 percent of adults who don’t crack open a book after graduating high school. They’re reading industry publications to learn more about their field and excel at work.

They’re reading about money management and personal development so that they do better in life. They’re constantly learning. They’ll ensure that they keep up their certifications, and they’ll proactively earn additional certifications to qualify for raises and promotions.

10. Rich Mindsets Are Better At Risk Management

 

Poor mindsets often live in fear of taking new risks.

The rich aren’t gambling with their money, whether it is taking trips to the casinos or taking big risks with penny stocks. They are careful to manage risk. One way they do this is by having the right insurance coverage. They have life insurance, health insurance, and disability insurance so that a personal disaster doesn’t wipe them or their families out. They won't just start a business or investment without analyzing its profitability.

They have emergency funds with several months of savings so that they can cover a major unexpected expense without having to go into debt. They prioritize protecting themselves over spending money on wants. This doesn’t mean they don’t invest in stocks or real estate. It means they do their homework before investing money.

They research the properties and the costs to rehab and sell them before they buy. They research stocks or mutual funds before putting in their money. Educating themselves about various subjects reduces their risk level. And that is why one of the differences between the rich vs poor mindset is that the poor often live in fear of catastrophe, while the rich expect to be able to weather the storm.

11. Rich vs Poor Mindset: Rich People Build Multiple Streams of Income

 

Poor people have one stream of income – their job. 

Poor people put all of their eggs in one basket by being dependent on one stream of income.

The wealthy are known for their work ethic, but there are plenty of people who work hard but remain in poverty. There are several ways the rich work differently. One is that they devote time to planning their financial future. They save for retirement so that they have a passive stream of income before they have to retire from their job.

They aggressively pay down debt and avoid taking on new debt so that their income goes further. They dedicate time to handling their investments while investing every month, whether it is in a 401K or rental properties. If they own a business, they capitalize on it to generate additional income.

It might be licensing intellectual property or renting out one of the suites to generate additional revenue. They may hold a day job but teach or consult on the side to earn additional income. This can be a form of risk management, too, since it gives them a head start if they lose their job or simply want to start their own full-time business.

12. Rich Mindsets Believe in Saving, Investing, And Multiplying

 

Poor mindsets splurge on materialistic things. 

Poor people end up saving nothing to invest.

Rich mindsets save, save, save. They save 10% to 20% of their net income every year. The rich are intentional. They don’t put off saving for the future. They start saving with every paycheck, and they choose not to splurge so they can make that next 15 percent contribution to retirement.

They don’t say they’ll pay off the debt later. They create a plan to pay down debt and follow it, month after month until they’re debt-free. According to “The Millionaire Next Door” and Chris Hogan’s follow-up book “Everyday Millionaires”, most millionaires by net worth either follow a budget or deliberately send a set percentage to savings and live off the rest.

In short, they devise plans and follow them. They set goals, and by focusing on them and constantly working toward them, typically achieve them. Note that it isn’t just money. This is why the wealthy are less likely to be overweight, too. If you’re already used to consistently working toward financial goals, an exercise and diet plan is just one more plan to follow.

Remember, for anyone to cross the line from poverty to wealth, you need to have a change of mindset. If you want to get rich, then you need to change your mindset and begin to see things from the perspective of the wealthy. Hope you liked this article! 

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